Gold bugs around the world have been rejoicing this week as the price of gold has climbed above $1,000 per ounce. On the same note, forex investors with money in the Australian dollar have been rejoicing for the same reason.
You see, the Australian dollar has a cozy relationship with gold. As gold prices go up, the Australian dollar typically goes up, and as gold prices go down, the Australian dollar typically goes down. This relationship stems from the fact that Australia mines and exports a good portion of the world's gold.
Well, if you want to take advantage of the boom in the Australian dollar without having to jump into the forex market, you can buy the CurrencyShares Australian Dollar Trust (NYSE: FXA).
The Australian dollar has also been gaining steam compared to the U.S. dollar lately as investors have been pulling their money out of U.S. Treasuries -- increasing the supply of U.S. dollars on the market -- and moving it to higher-yielding investment opportunities.
One of those higher-yielding opportunities has been the Australian dollar because the Reserve Bank of Australia (RBA) -- Australia's equivalent of the Federal Reserve -- didn't cut interest rates as far as the Fed did. The RBA set rates at 3.00%, compared to the 0.25% the Fed set rates at.
Wade Hansen is an analyst at Learning Markets.
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